- Pakistani Rupee (PKR) treads water at the start of the new fiscal year on mixed risk sentiment
- Received loan of $1.3 billion from China to achieve foreign currency reserves agreed with International Monetary Fund (IMF)
- US Dollar (USD) investors look to slew of data later today in addition to the release of minutes from the latest Federal Reserve monetary policy meeting.
- At 09:15 UTC, US Dollar Pakistani Rupee (USD/PKR) exchange rate trades flat at 167.60
The Pakistani Rupee is holding steady on Wednesday at 167.60, picking up off its all time low of 168.4 touched in the previous session.
Risk sentiment across global financial markets is mixed. On the one hand, stronger than forecast data from the US, Europe and China is supporting a risk on mood. However, with daily coronavirus cases in the US at 47,000, the highest since the start of the coronavirus crisis, fears are growing that halting or rolling back lock down measures in America could knock the global economic recovery.
Domestically, the Rupee is being supported after Pakistan received a long awaited $1.3 billion loan from China helping Islamabad achieve the target of foreign exchange reserves of around $12 billion by then end of the fiscal year 2019-20.
Foreign currency reserves had dropped to under $10 billion in the week ending 18th June due to escalating foreign debt payments in recent weeks.
Fitch ratings said in a recent report than Pakistan’s debt to GDP ratio would reach 89% in the outgoing fiscal year. However this is expected to fall in the coming fiscal year.
The US Dollar is trading broadly flat versus its major peers, owing to mixed risk sentiment and as investors await a deluge of data due to be released later today. The data releases include ISM manufacturing and non-manufacturing PMI readings, in addition to the ADP private payrolls. Analysts are expecting private payrolls to increase 3 million in June, after falling -2.7 million in May, indicating the labour market is starting to improve.
The minutes from the latest Federal Reserve meeting will also be scrutinised closely for further cues as to how the central bank sees the economic recovery developing. A very cautious Fed could boost demand for the safe haven US Dollar.
